What have we done to our thriving nation?
Terah and I got married in 2000, our first "home" was a two bedroom apartment above some storage units. We had no furniture, just a bed and a small Shopko style table and loud neighbors with thin walls. We all shared the washer and dryer! I worked nights, and she worked part-time days. We lived in this apartment for two years, paying about $500 a month. The landlord loved us. Then we found a small house out in the "country" that we just loved, next to where I had spent my entire life growing up. It was private and cozy for the same amount of money, and another great landlord. We also lived here for two years. Like so many people who are set on the American Dream (which is not bad in and of itself, another subject matter), we wanted our own home. During these four years of working nights, I was also going to college and finally trade school where I was able to get certified in the technology field. My wife picked up a book one day called "The Power of a Praying Wife", the chapter that day described how important it was to pray for the man's job, and so she did. Just an hour or two later, I called her from work and said, "You will never believe what just happened! Someone has asked me to work in the IT department!" So that was the beginning of my work in IT. And after one of the toughest seasons of work in my entire life, working LONG days and weekends in my new IT career, Terah and I finally decided to look for a house of our own. The market was very affordable in today's standards, but we were very scared of jumping into a payment that would nearly double our rent. We jumped out in faith and found a small house in town that was the first of many being built in a new subdivision. This was the end of 2004. (The year is important to recognize as it is a great example of what has happened to our economy in a few short years) We purchased our first home for 130k. Once we settled in, Terah finally got her wish and Daddy agreed it was time to begin our family. Over the course of the next two years, we had three kids and our home increased greatly in value. Unknown to me at the time, and quite frankly, I didn't really care, there was something very significant going on with real estate, banking, and loans. We found we didn't really like living in town once the subdivision grew to have a lot of neighbors and no privacy, but we had no plans to move out anytime soon. Then, one morning at work I received an email of a property listing in our dream location. I wasn't looking for property at all, but I opened this email for some reason and once opened I knew this was for us! It was so perfect that we literally viewed it, made an offer, offer accepted within a matter of a couple of days! How would we be able to afford a property payment and a house payment though? Terah no longer worked, and we had three kids now! I did what I will never do again (hopefully); I took out a 2nd loan against our house that had increased so much in value and used this to pay for the property. The 2nd loan added another $400 a month on a 1% interest I believe to ensure it was not a variable interest rate. The only reason I would make a big move like that was knowing that I would immediately sell our house to build on the property and this 2nd loan would soon be gone. So we quickly put our house on the market and it sold within a week or two ending in a bidding war. The amazing thing is that we nearly doubled the money we paid for it two and a half years prior. And this is the point I am getting to. Long-story made short, we moved in with my parents for 9 months while we built our dream home in our dream location. We paid a large chunk of it with the money we made on the first home, and we have lived here happily ever after for the last four years or so.
All this to show something very interesting. While our first home was very affordable, real estate was booming out of control in other states and would soon hit Idaho. What much of America did not know is that the Clinton administration and possibly the Bush administration were pushing Fanny May and Freddie Mack to purchase billions of dollars worth of home equities from banks all over the US. And I believe banks were encouraged to hand money to people without much qualifications. It started in places like California where the real estate was already more than anyone could afford, so the banks offered interest only loans with variable interest rates after five years. It was the only way people could afford a home! Then Idaho caught up to the real estate boom and as we experienced, properties values doubled in just a couple of years. I remember and am very thankful for our mortgage agent, he said that banks were handing these loans out left and right, but he refused. He said he wouldn't sleep at night knowing they would probably lose their home in five years. Wow, what foresight! Or maybe I should say, what common sense!
Then it happened. Immediately after we sold our first home, everything crashed overnight. There is a good chance we would not have sold our home at the value we did if we had even waited weeks. And so began the start of a failing economy around 2007. With oil hitting record numbers and all of these interest only loans hitting year five, things quickly headed south. People were losing their homes left and right, and the cost of fuel was causing businesses to cut way back. It was a very fast downward spiral, people homeless and jobless, and wall street hitting lows we had not seen since the great depression. It continued to spiral out of control - no one was buying real estate (mostly losing it), so the construction industry died almost immediately. And of course the next thing to go was the logging industry and mills.
What now? We were at the end of the Bush era and the beginning of "change", the Obama administration. The government thought it best to push out $700 billion to stimulate the dying economy. If I remember right, this was the second large stimulus (TARP) they pushed out followed by massive bailouts to big firms such as AIG ($85 billion!), Lehman Brothers, Citigroup, and the auto industries. Then the federal reserve continued to lower interest rates (which are at historic lows today) and print more money. They were band aids to a wound that would soon be infected. While the Bush administration set a record adding a huge amount to the country's deficit with the war on terror, the Obama administration made it look like small beans in just a couple of years doubling the national debt. We have never seen money spending like this in the history of the world - except maybe on a smaller level. Japan went through this same sort of economic slump years ago and took similar actions to fix their economy.
So here we are today. America was hopeful we made it through the depression of 2008. Unfortunately, it is as volatile as ever. Confidence is very low, and wall street has been a roller coaster, mostly headed downward. People are still losing their homes in record numbers and jobs are still the primary concern today. When taking a drive you will see for sale signs everywhere, and many being sold by banks. There are so many problems compounding from actions taken over the prior 10 years, it will take at least that to recover from it. We recently faced America's first default on paying a record deficit and received a lowered credit rating for the first time in our history which added to an already very weak economy. And just today, the feds have began litigation against 17 banks across America to try and get some of the money back from all of the defaulting loans that were sold to Fanny Mae and Freddie Mack. The estimate is that they were sold over $900 billion in loans. Filing law suits with these banks will just hurt confidence in our banking systems even more so. Bank of America recently dove 30% in value!
It has been extremely difficult times for many over the last couple of years; we all have friends and family fighting to keep their homes and their jobs, or finding any kind of work at all. In the end, I have written of a lot of doom and gloom in this post. That is not my nature; I am just interested in these things and it is certainly interesting to watch it all unfold. Sure I miss details and I don't know the entire story. What I do know is this - I trust in the Lord, creator of all that we see, and I trust his promise to take care of me no matter what this economy does. They can take my home, my job, my money, but I will always have everything I need (Matthew 6). The Lord is in control and faithful beyond our comprehension! When I look back over the years, at the present, and into the future, it may get a lot worse. But through it all, God's faithfulness to me and my family is evidenced over and over, and I am a truly blessed child of God!
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